Microsoft removed Teams from M365 in the EU. The rest of the world got new standalone options. This guide maps every way to license Teams without buying a full Microsoft 365 subscription: the free tier, Teams Essentials, the standalone add-on, Teams Phone, Teams Rooms, Teams Premium, calling plans, operator connect, and direct routing, with the cost comparisons that determine which path is right for your organisation.
This guide is part of the Microsoft Licensing Knowledge Hub. For the full M365 licensing reference, see the Microsoft Licensing Guide 2026. For plan comparisons, see M365 E3 vs E5 vs F3 and Business vs Enterprise Plans.
In July 2023, Microsoft began selling Teams separately from Microsoft 365 and Office 365 in the European Union and European Economic Area, following a European Commission investigation into the bundling of Teams with M365 as a potentially anticompetitive practice. Microsoft removed Teams from new M365 and O365 commercial subscriptions in the EU/EEA and made it available as a separate add-on.
Subsequently, Microsoft extended standalone Teams availability globally, creating a new licensing structure where organisations worldwide can purchase Teams independently. For existing M365 subscribers who already had Teams included, nothing changed. Teams remains part of their subscription. The unbundling affects new subscriptions and creates new commercial options for organisations that want Teams capabilities without a full M365 commitment.
For existing M365 E3/E5 customers, Teams remains included at no additional cost. Do not purchase standalone Teams for users who already have M365 E3, E5, Business Basic, Business Standard, or Business Premium. They already have Teams. The standalone options exist for users who do NOT have these plans and need Teams capabilities. This is the most common Teams licensing waste we find during assessments.
Microsoft offers a free version of Teams for organisations with up to 100 participants per meeting and limited features. The free tier is appropriate for very small businesses or personal use but lacks the capabilities enterprises require.
What is included. Unlimited chat messages (personal and group), meetings of up to 60 minutes with up to 100 participants, 5 GB of cloud storage per user, screen sharing during meetings, custom backgrounds, Together mode, and basic file sharing. Live captions are available. Integration with other Microsoft products is limited.
What is NOT included. Meeting recording, meeting transcription, breakout rooms, scheduled meetings (with full calendar integration), administrative controls, compliance features (eDiscovery, legal hold, DLP), phone system capabilities, Teams Rooms management, custom branding, enterprise-grade SLA, or technical support beyond community forums. The 60-minute meeting limit and 100-participant cap make the free tier impractical for most business use.
Who should use it. Very small teams (under 10 people) exploring Teams before committing to a paid plan. Freelancers or sole proprietors who need basic chat and brief meetings. External collaborators who need to participate in meetings hosted by paid Teams users do not need their own licence to join meetings hosted by others. The free tier is not appropriate for any organisation with compliance requirements, administrative needs, or more than occasional use.
Teams Essentials is the entry-level paid Teams plan designed for small and mid-size businesses that need Teams for meetings and collaboration without the full M365 productivity suite.
What is included. Unlimited chat, meetings up to 30 hours with up to 300 participants, 10 GB of cloud storage per user, meeting recordings (with storage in OneDrive/SharePoint), meeting scheduling with Outlook calendar integration, group meetings and webinars for up to 300 attendees, live captions and transcription, breakout rooms, custom backgrounds, whiteboards, polls, together mode, collaborative annotations, and phone and web support.
What is NOT included. Office desktop applications (Word, Excel, PowerPoint), Exchange Online mailbox, SharePoint Online sites, OneDrive for Business (full 1 TB), advanced compliance (eDiscovery, legal hold, DLP), advanced admin controls, information barriers, Teams Phone capabilities, and Teams Premium features. Teams Essentials users get 10 GB of cloud storage, not the 1 TB OneDrive allocation that M365 plans provide.
Teams Essentials at $4/user/month is the right plan for organisations that use Google Workspace (or another productivity suite) as their primary platform but need Microsoft Teams for meetings, chat, and collaboration with partners and customers who use the Microsoft ecosystem. A 500-person organisation on Google Workspace that needs Teams for external collaboration pays $2,000/month ($24,000/year) for Teams Essentials, a fraction of the cost of migrating to M365 E3 at $36/user/month ($216,000/year) to get Teams along with Office apps, Exchange, and SharePoint that the organisation does not need. See Microsoft Licensing for Beginners.
The standalone Teams add-on is the product created by the EU unbundling. It provides the same Teams experience that was previously included in M365 and O365, but sold separately.
What is included. The full Teams experience equivalent to what M365 E3 users receive: unlimited chat, meetings up to 30 hours with up to 1,000 participants (up to 10,000 in view-only broadcasts), meeting recording with transcription, meeting scheduling, webinars, live events, breakout rooms, all collaborative features, and the standard administrative and compliance capabilities available in the Teams service.
Who needs it. The standalone add-on is designed for two scenarios. First, new EU/EEA customers purchasing M365 or O365 where Teams is no longer bundled, who add Teams back at $5.25/user/month. Second, organisations on Office 365 plans (O365 E1, E3, E5 in regions where Teams has been unbundled) that want to add Teams without upgrading the entire plan.
For EU/EEA customers on new M365 E3 subscriptions, the total cost is now M365 E3 ($36) + Teams ($5.25) = $41.25/user/month. For existing M365 E3 customers who had Teams included, the cost remains $36. Microsoft reduced the M365 price by $2 and priced Teams at $5.25, resulting in a net $3.25 increase for customers who add Teams back. This pricing structure has been criticised as effectively raising the total cost of the M365+Teams bundle while appearing to respond to unbundling requirements.
| Teams Option | Price/User/Month | Max Meeting Duration | Max Participants | Storage | Office Apps | Compliance |
|---|---|---|---|---|---|---|
| Teams Free | $0 | 60 minutes | 100 | 5 GB | No | No |
| Teams Essentials | $4 | 30 hours | 300 | 10 GB | No | Basic |
| Standalone Add-On | $5.25 | 30 hours | 1,000 | Via M365 plan | Via M365 plan | Full |
| Included in M365 E3 | $0 (in $36 plan) | 30 hours | 1,000 | 1 TB OneDrive | Yes | Full |
| Included in M365 E5 | $0 (in $57 plan) | 30 hours | 1,000 | 1 TB OneDrive | Yes | Advanced |
Teams Phone transforms Microsoft Teams from a meetings and messaging platform into a full enterprise telephone system, replacing traditional PBX systems, SIP trunks, and desk phones with cloud-based calling.
Teams Phone Standard ($8/user/month). The base telephony licence that provides cloud PBX capabilities: make and receive calls, call transfer, call forwarding, voicemail, auto-attendants, call queues, call park, shared line appearance, and emergency calling. Teams Phone Standard does NOT include PSTN connectivity. It provides the phone system, but the actual connection to the public telephone network requires a separate calling plan, operator connect, or direct routing configuration.
Included in M365 E5. Teams Phone Standard is included in M365 E5 ($57/user/month). Organisations on E5 already have the phone system licence at no additional cost. They still need to add PSTN connectivity through one of the three options below. This is one of the key differentiators between E3 and E5: E3 does not include Teams Phone, E5 does. See E3 vs E5 Comparison.
Teams Phone with Calling Plan ($12/user/month domestic, approximately $24/user/month international). Bundles Teams Phone Standard with a Microsoft Calling Plan that provides PSTN connectivity through Microsoft as the carrier. Domestic calling plans include a monthly minute allocation for calls within the user's country (typically 3,000 minutes for enterprise plans). International calling plans add outbound international minutes.
| Path | How It Works | Infrastructure Required | Best For | Typical Cost |
|---|---|---|---|---|
| Microsoft Calling Plans | Microsoft acts as telephone carrier | None (fully cloud) | Moderate calling volumes in supported countries (approximately 30) | $12/user/month domestic |
| Operator Connect | Third-party carrier integrates via programme | None (carrier-managed) | Carrier flexibility with managed integration | Varies by carrier ($2 to $8/user/month) |
| Direct Routing | Organisation connects own SBC to Teams Phone | SBC hardware/virtual + SIP trunks | Existing carrier contracts, complex routing, unsupported countries | Varies ($2 to $8/user/month + SBC costs) |
Microsoft Calling Plans are the simplest option (no additional infrastructure) but are available in limited countries and may be more expensive per minute than traditional carriers for high-volume callers. Operator Connect provides carrier flexibility with managed integration through major telcos (BT, AT&T, Verizon, Deutsche Telekom). Direct Routing provides maximum control over carrier selection and cost management but requires SBC hardware or virtual appliance deployment, SIP trunk configuration, and ongoing management.
| Scenario | Base Plan | Teams Phone | PSTN | Total/User/Month |
|---|---|---|---|---|
| M365 E5 + Calling Plan | $57 (includes Phone) | Included | $12 (domestic) | $69 |
| M365 E3 + Phone + Calling Plan | $36 | $8 | $12 (domestic) | $56 |
| M365 E3 + Phone + Operator/Direct | $36 | $8 | $2 to $8 (carrier) | $46 to $52 |
| Teams Essentials + Phone + Calling | $4 | $8 | $12 (domestic) | $24 |
| Teams Essentials + Phone + Operator/Direct | $4 | $8 | $2 to $8 (carrier) | $14 to $20 |
Teams Essentials ($4) + Teams Phone ($8) + Operator Connect/Direct Routing ($2 to $8) = $14 to $20/user/month. This is the lowest-cost path to Teams-based telephony for organisations that do not need M365 productivity applications. A Google Workspace organisation adding Teams Phone for 500 users pays $7,000 to $10,000/month instead of migrating to M365 E3 ($18,000/month) or E5 ($28,500/month). Compare against Zoom Phone ($10 to $20/user/month), RingCentral ($20 to $35/user/month), or 8x8 ($24 to $44/user/month). See Key Leverage Points for Microsoft Deals.
Teams Rooms brings the Teams meeting experience into physical conference rooms through dedicated hardware (meeting displays, cameras, speakers, compute devices) with a room-specific licence.
Teams Rooms Basic (free, up to 25 rooms). Provides the core Teams Rooms experience: join and host Teams meetings, share content, use camera and audio, and manage rooms through the Teams admin centre. The 25-room limit makes this appropriate for small organisations or pilot deployments.
Teams Rooms Pro ($40/room/month). The full Teams Rooms experience: unlimited rooms, advanced room management in the Teams Rooms Pro Management portal, AI-powered intelligent room insights, remote device management, conditional access support for room accounts, dual-screen support, and premium meeting features including front row layout, intelligent speaker recognition, and spatial audio. Teams Rooms Pro also includes Teams Phone for the room device, enabling the room to function as a conference phone.
Teams Rooms licences are per-room, not per-user. Each conference room with Teams Rooms hardware needs its own licence. An enterprise with 200 conference rooms pays $8,000/month ($96,000/year) for Teams Rooms Pro. This cost is separate from user-level Teams or M365 licences. Budget for Teams Rooms as a facilities cost, not a per-user IT cost, to avoid underestimating the total Teams investment. Teams Rooms requires certified hardware from Poly, Yealink, Logitech, Crestron, Neat, or Cisco, ranging from $2,000 to $5,000 for a small huddle room to $10,000 to $30,000+ for a large boardroom.
Teams Premium is an add-on licence that provides advanced meeting features beyond what is included in standard Teams (whether through M365 or standalone).
What Teams Premium includes. Intelligent meeting recap (AI-generated meeting notes, action items, and topics), live translations for captions (40+ languages in real time), custom branded meeting templates (organisation-specific branding, watermarks), advanced meeting protection (watermarking for shared content, who-can-record restrictions, end-to-end encryption for meetings), virtual appointments with SMS notifications and queue management, advanced webinar features (custom registration, speaker bios, waitlists), custom together mode scenes, and advanced RTMP-in for streaming.
What Teams Premium does NOT include. Teams Phone (separate licence), Teams Rooms (separate licence), or any M365 productivity applications. Teams Premium enhances the meeting experience. It does not provide telephony, room management, or productivity tools.
The commercial evaluation. Teams Premium at $10/user/month is a significant per-user investment. For 5,000 users, the annual cost is $600,000. Organisations should evaluate Teams Premium against three criteria: (1) does the organisation conduct enough meetings where AI recaps provide measurable time savings? (2) does the organisation have multilingual teams where live translation enables participation that would otherwise not occur? (3) does the organisation have compliance or security requirements that mandate meeting watermarking, encryption, or branded templates? If two or more criteria are met, Teams Premium may justify the investment. If only one is met, a targeted deployment (licensing Premium only for the affected user groups) is more cost-effective than enterprise-wide deployment. See our Copilot Licensing Differences guide for the Copilot overlap analysis.
The right Teams licensing path depends on the organisation's existing productivity platform, telephony requirements, and meeting sophistication needs.
| Scenario | Recommended Path | Monthly Cost (1,000 Users) | Rationale |
|---|---|---|---|
| Google Workspace org needing Teams for external meetings | Teams Essentials ($4/user/month) | $4,000 | Full Teams meeting and chat at a fraction of M365 cost; do not buy M365 just for Teams |
| Existing M365 E3/E5 org | Teams already included; evaluate add-ons only | $0 incremental | Teams Phone ($8) if telephony needed (included in E5), Teams Rooms ($40/room), Teams Premium ($10) for AI features |
| EU/EEA org on new M365 without Teams | Standalone Teams add-on ($5.25/user/month) | $5,250 | Restore Teams experience; compare total cost against competitive alternatives |
| Org needing cloud telephony without M365 | Teams Essentials ($4) + Teams Phone ($8) + PSTN | $14,000 to $24,000 | Most cost-competitive when combined meetings + telephony needed |
| Org migrating from traditional PBX | M365 E3/E5 + Teams Phone + Operator/Direct | $44,000 to $65,000 | Positive ROI within 18 to 24 months accounting for avoided PBX replacement |
Calculate the full PBX replacement economics: current PBX maintenance and support costs (typically $3 to $8/user/month for managed PBX), SIP trunk costs ($1 to $5/user/month), desk phone depreciation, and PBX hardware end-of-life replacement costs. Teams Phone with Operator Connect or Direct Routing at $10 to $20/user/month (Microsoft licence + carrier) replaces the PBX, eliminates hardware refresh cycles, and provides a unified communications platform. Most PBX-to-Teams migrations show positive ROI within 18 to 24 months when accounting for avoided PBX hardware replacement, reduced carrier costs, and consolidated vendor management. See the Remote and Hybrid Work Licensing Guide.
1. Eliminate duplicate Teams licensing. Every user with M365 E3, E5, Business Basic, Business Standard, or Business Premium already has Teams (in non-EU/EEA regions and for existing subscriptions). Audit the licence estate for users who have both an M365 plan that includes Teams and a standalone Teams or Teams Essentials licence. Remove the standalone licence and save $4 to $5.25/user/month. This is the most common Teams licensing waste.
2. Right-size Teams Phone deployment. Not every user needs Teams Phone. Knowledge workers who primarily communicate via Teams chat and meetings may not need PSTN calling capability. Deploy Teams Phone to users who actually make and receive external phone calls: reception, sales, customer service, executives, and field staff. A 5,000-user organisation where only 2,000 users need telephony saves $24,000/month by licensing Teams Phone for 2,000 users ($16,000) instead of 5,000 ($40,000).
3. Evaluate Operator Connect and Direct Routing vs Microsoft Calling Plans. Microsoft Calling Plans are the simplest option but often not the cheapest. Compare the per-minute cost of the Microsoft Calling Plan against Operator Connect or Direct Routing with existing carriers. High-volume callers (sales teams, call centres) almost always achieve lower per-minute costs through Operator Connect or Direct Routing. The infrastructure investment in Direct Routing (SBC deployment and management) pays for itself within 6 to 12 months for organisations with 500+ phone users and high call volumes.
4. Deploy Teams Premium to targeted user groups. Intelligent meeting recap is valuable for managers and executives who attend many meetings. Live translated captions are essential for multilingual teams. Meeting watermarking and encryption are required for regulated industries. Deploy Teams Premium only to the user groups that benefit from specific features, not enterprise-wide. A targeted deployment of 1,000 users (from a 5,000-user total) saves $480,000/year compared to full deployment. See our Teams Premium Licensing Guide.
5. Use Teams Rooms Basic for small deployments. The free Teams Rooms Basic licence supports up to 25 rooms. For organisations with 25 or fewer meeting rooms, this eliminates the Teams Rooms Pro cost entirely. Even organisations with more than 25 rooms can apply the 25 free licences to their least-used rooms and purchase Teams Rooms Pro only for high-traffic conference rooms and boardrooms.
6. Negotiate Teams licences within the EA. For EU/EEA organisations where Teams is now a separate line item, the Teams add-on becomes a negotiable element in the Enterprise Agreement. Use the unbundled pricing as leverage: the total M365+Teams cost should not exceed what the bundled price was before unbundling. Teams Phone and Teams Premium are also negotiable, particularly when bundled with large M365 commitments. See Key Leverage Points.
7. Consider M365 F1/F3 for frontline workers. Frontline workers who need Teams for communication but not Office desktop applications should be on M365 F1 ($2.25/user/month) or F3 ($8/user/month), not E3 ($36/user/month). F1 and F3 include Teams with the same messaging and meeting capabilities. F3 adds web and mobile Office apps. For a retail or manufacturing enterprise with 3,000 frontline workers, F1 instead of E3 saves $101,250/month. See M365 E3 vs E5 vs F3.
The organisations that overspend on Teams are the ones that deploy every add-on to every user because the per-user price seems low. At scale, $10 per user per month across 10,000 users is $1.2 million per year. Teams Phone at $8/user/month for 5,000 users who do not make phone calls is $480,000/year wasted. Teams Rooms Pro at $40/room/month for 25 rooms that could use the free Basic licence is $12,000/year wasted. The savings come from precision: matching each licence to the users and rooms that actually need it.
Teams licensing appears straightforward on the surface (a few tiers, clear pricing) but becomes complex when mapped across a real enterprise with multiple user populations, telephony requirements, conference room deployments, and regional considerations (EU unbundling, calling plan availability, carrier contracts).
Teams standalone vs M365 bundling analysis. Redress Compliance evaluates whether your organisation benefits from M365 with included Teams, standalone Teams + separate productivity tools, or a hybrid approach. For organisations on Google Workspace, we model the cost of Teams Essentials vs M365 migration to identify the commercially optimal path.
Teams Phone cost modelling. We compare Microsoft Calling Plans, Operator Connect, and Direct Routing against your organisation's calling patterns, existing carrier contracts, and geographic distribution. High-volume callers, international calling requirements, and multi-country deployments each favour different PSTN connectivity paths.
Teams Rooms budgeting. We assess meeting room inventory, categorise rooms by usage patterns, and recommend the optimal mix of Teams Rooms Basic (free) and Teams Rooms Pro licences. The hardware selection (certified devices from Poly, Yealink, Logitech, Crestron, Neat) is matched to room size and usage requirements.
EA negotiation support. Teams, Teams Phone, Teams Rooms, and Teams Premium are all negotiable within the Enterprise Agreement. We integrate Teams licensing into the broader EA renewal negotiation to maximise combined discount leverage.
"Teams Essentials at $4/user/month is the most underrated licence in the Microsoft portfolio: it gives you the entire Teams meeting and chat experience for one-ninth the price of M365 E3. For organisations on Google Workspace, Zoho, or other productivity platforms that need Microsoft-compatible meetings, it is the obvious answer. For organisations already on M365, the focus should be on avoiding over-deployment of add-ons: Teams Phone only for users who make phone calls, Teams Premium only for users who benefit from AI features, and Teams Rooms budgeted as facilities cost, not per-user IT cost."
Yes. There are multiple paths to Teams without M365: Microsoft Teams (Free) for basic chat and short meetings, Teams Essentials ($4/user/month) for full meetings and chat without Office apps, and the standalone Teams add-on ($5.25/user/month) for the full Teams experience that was previously bundled with M365. Teams Phone can also be added to these standalone plans for telephony capability. The right path depends on your existing productivity platform and feature requirements.
In response to a European Commission investigation into the bundling of Teams with M365 as a potentially anticompetitive practice, Microsoft began selling Teams separately from M365 and O365 in the EU/EEA in July 2023. Microsoft subsequently extended standalone Teams options globally. For existing M365 subscribers, Teams typically remains included in their subscription. The unbundling created new commercial options but also introduced pricing complexity, with the M365+Teams total cost in some configurations exceeding the previous bundled price.
Teams Phone Standard is $8/user/month (included in M365 E5 at no additional cost). PSTN connectivity adds to this: Microsoft Calling Plan (domestic) is approximately $12/user/month, international approximately $24/user/month. Operator Connect and Direct Routing use third-party carrier rates (typically $2 to $8/user/month depending on volume). Total Teams Phone cost per user: $10 to $32/month depending on plan and connectivity choice. The most cost-effective path for high-volume callers is typically Teams Phone with Operator Connect or Direct Routing.
For existing subscriptions, yes. Teams is included in M365 E3. For new subscriptions in the EU/EEA, Teams may be a separate add-on ($5.25/user/month) due to the unbundling. Outside the EU/EEA, new M365 E3 subscriptions generally still include Teams. Check your specific agreement and region, as the bundling rules continue to evolve. Regardless of region, Teams Phone is NOT included in E3 (it is included in E5). See our M365 E3 vs E5 vs F3 comparison.
Teams Rooms Basic is free for up to 25 rooms per organisation. Beyond 25 rooms, Teams Rooms Pro ($40/room/month) is required. Even organisations with more than 25 rooms can use the 25 free licences for their lowest-traffic rooms and purchase Pro only for high-traffic spaces that benefit from advanced management, intelligent speaker recognition, and AI-powered room insights. This simple tactic saves $12,000/year for the 25 rooms on the free tier.
Teams Essentials at $4/user/month. It provides the full Teams meeting and chat experience without Office apps, Exchange, or SharePoint that a Google Workspace organisation does not need. A 500-person organisation pays $24,000/year for Teams Essentials vs $216,000/year for M365 E3 to get the same Teams capability plus Office apps it already has through Google. If telephony is also needed, add Teams Phone ($8/user/month) and Operator Connect or Direct Routing for the most cost-effective unified communications setup alongside Google Workspace.
Redress Compliance provides independent Microsoft licensing assessments covering Teams standalone vs M365 bundling analysis, Teams Phone cost modelling (Calling Plans vs Operator Connect vs Direct Routing), Teams Rooms budgeting, and EA negotiation support for unbundled Teams pricing.
Microsoft Advisory ServicesIndependent Teams licensing analysis. Phone cost modelling. Rooms budgeting. EA negotiation support. 100% vendor-independent.